IRS Rolls Out Crypto Tax Overhaul: What US Taxpayers Need To Know for 2025

Key Takeaways

• Starting in 2025, crypto transactions, including Bitcoin, will be subject to third-party reporting.
• Custodial platforms, hosted wallet providers, and payment processors must track and report crypto transactions on a new form.
• For decentralized platforms, third-party reporting won’t be required until 2027.

As tax season approaches, Americans trading digital assets like Bitcoin (BTC) should brace for major changes in reporting requirements.

Starting in 2025, platforms managing cryptocurrency transactions will be required to report them directly to the IRS.

Crypto Tax Reporting

Under the new regulations, custodial platforms like Coinbase and Gemini will play a pivotal role in this third-party reporting system.

These platforms, along with hosted wallet providers, digital asset kiosks, and payment processors, will be required to track crypto purchases and sales and submit detailed reports to the IRS.

Transactions will be reported on a new form, the 1099-DA , which brokers will send to both customers and the IRS by early 2026.

Similar to other 1099 forms used for dividends or capital gains, the information from the 1099-DA must be included in taxpayers’ 2025 returns.

One key aspect to note: while transaction details will be reported starting in 2025, the cost basis—the purchase price of the crypto—will not be included until the 2026 tax year.

“These regulations will help ensure that all taxpayers play by the same set of rules and have access to the information they need to file their taxes accurately,” said Aviva Aron-Dine , acting assistant secretary for tax policy.

She emphasized that aligning crypto reporting with traditional assets will simplify filing and help close the tax gap.

Crypto ETFs To Be Included

The new reporting requirements will extend to crypto exchange-traded funds (ETFs) as well.

Jessalyn Dean, vice president of tax information at Ledgible, a crypto tax software provider, noted that ETF providers would issue either a 1099-B or 1099-DA to account for proceeds from the sale of ETF shares.

This reporting will also cover any taxable events within the ETF, similar to how ETFs holding commodities like gold operate.

For instance, if the ETF manager sells holdings to cover expenses, any resulting gains or losses must be reported, and investors will need to account for their share.

Experts recommend that investors holding Bitcoin ETFs consult a tax advisor to navigate these new requirements.

Exceptions for Decentralized Platforms

There are some exceptions to these rules. For transactions conducted on decentralized platforms , where users maintain custody of their assets and trade through peer-to-peer transactions, the third-party reporting requirements won’t take effect until 2027.

These platforms will report the gross proceeds from transactions but won’t provide cost basis information, as they do not hold custody of the digital assets.